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Pre-shipment' means any loan or advance granted or any other credit provided by a bank to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment, on the basis of letter of credit opened in his favour or in favour of some other person, by an overseas buyer or a confirmed and irrevocable order for the export of goods from India or any other evidence of an order for export from India having been placed on the exporter or some other person, unless lodgment of export orders or le
Margin on PCFC advances should be as per sanction stipulations. Actual margin to be maintained is margin as per sanction terms or EEFC component, whichever is higher. For details of calculation of drawing power refer para 4.7 of chapter 4. It must also be ensured that there is enough margin available to cover the discount/interest on F.C. bills discounted at the post-shipment stage.
REFINANCE: Advances granted by way of PCFC are not eligible for refinance from RBI.
The Export Limits (PC and FDB) will be sanctioned in both INR and Foreign Currency (say in USD). While assessment will be done in INR based on working capital cycle including at pre-shipment and post shipment as per the existing methods, the foreign currency part of it will be worked out based on latest available FEDAI rate. ? Once foreign currency part is worked out as above, PCFC/FDBD outstanding will be controlled in foreign currency.
PERIOD OF CREDIT: PCFC, as in the case of Rupee pre-shipment credit is initially available for a specified period decided by sanctioning authority after taking into account relevant factors with a maximum 7 period of 180 days and branches should monitor the end use of credit as in the case of Rupee credit. It must also be ensured that advances granted under the PCFC Scheme are not diverted for domestic purposes.
The interest rate on PCFC is based on ongoing LIBOR/ EURO LIBOR / EURIBOR for an appropriate period at the time of the advance plus sanctioned spread. LIBOR / EURO LIBOR / EURIBOR rates are normally available for a standard period of 1, 2, 3, 6 and 12 months. 'B' category branches have to disburse PCFC at the rate obtained.
The rate of interest may change in tune with the movement of LIBOR, The rate may therefore differ for each drawal. Interest is to be charged on PCFC availed of at the rate agreed at the
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